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Under Obama!

Debt Up $6.666 Trillion Under Obama

February 4, 2014 - 1:31 PM

President Barack Obama (AP Photo/Keith Srakocic)

(CNSNews.com) - The debt of the U.S. government has increased $6.666 trillion since President Barack Obama took office on Jan. 20, 2009, according to the latest numbers released by the Treasury Department.

When President Obama was first inaugurated on Jan. 20, 2009, the debt of the U.S. government was $10,626,877,048,913.08, according to the Treasury Department’s Bureau of the Public Debt. As of Jan. 31, 2014, the latest day reported, the debt was $17,293,019,654,983.61—an increase of $6,666,142,606,070.53 since Obama’s first inauguration.

The total debt of the United States did not exceed $6.666 trillion until July 2003. In the little more than five years of the Obama presidency, the U.S. has accumulated as much new debt as it did in it’s first 227 years.

The business and economic reporting of CNSNews.com is funded in part with a gift made in memory of Dr. Keith C. Wold.

- See more at: http://cnsnews.com/news/article/ali-meyer/debt-6666-trillion-under-obama#nationaldebt

However, it's a little misleading to hold Obama (or any other President) accountable for the deficit incurred during his first year of office. That's because the budget for that fiscal year was already set by the previous President. Bush's last budget (FY 2009) created a deficit of $1.16 trillion, even without the spending on the Economic Stimulus Act. Most of this addition to the debt occurred after the new President took office, and so should not be attributed to Obama.

Laffer and Moore: Obama's Real Spending Record

President Obama shocked us the other day when he said, "Since I've been president, federal spending has risen at the lowest pace in nearly 60 years." Having heard him champion the "multiplier effects" of deficit-financed stimulus spending, we saw him as an enthusiastic supporter of throwing other people's money at just about any problem.

Thus began our quest to see where we had strayed from the straight and narrow. Here's the picture.

In the chart nearby we've plotted federal government spending on a National Income and Product Accounts (NIPA) basis as a share of total U.S. GDP from 1990 to the present. The NIPA numbers are used here as opposed to appropriations or outlays to capture the actual periods when production occurs. The stories the chart tells are amazing.

The first is how much government spending fell during President Bill Clinton's eight years in office and how low it was when he left office. When he became president in 1992, government spending was 23.5% of GDP, and when he left in 2001 it was 19.5% of GDP. President Clinton, in conjunction with a solid Republican Congress, cut government spending by more than any other president in modern times, and oversaw one of the greatest periods of economic growth and prosperity in U.S. history.

Sadly for fiscal conservatives, the biggest surge in government spending came during the last two years of President George W. Bush's eight years in office (2007-2008). A weakened Republican president dealing with a strident Democratic Congress, led by then-House Speaker Nancy Pelosi and Senate Majority LeaderHarry Reid, resulted in an orgy of spending.

Mr. Bush and Republicans in Congress capitulated to and even promoted each and every government bailout and populist redistribution canard put before them. It's a long list, starting with the 2003 trillion-dollar Medicare prescription drug benefit and culminating with the actions taken to stem the 2008 financial meltdown—the $700 billion Troubled Asset Relief Program, the bailout of insurance giant AIG and government-sponsored lenders Fannie Mae and Freddie Mac, the ill-advised 2008 $600-per-person tax rebate, the stimulus add-ons to 2007's housing and farm bills, etc. The script had it that greedy right-wingers were the cause of our collapse, and deficit spending and easy money the answer.

The numbers are mind boggling. From the second quarter of 2007, i.e., the first full quarter of a Pelosi-Reid dominated Congress and a politically weakened President Bush, to the second quarter of 2009 when President Obama assumed office, government spending skyrocketed to 27.3% of GDP from 21.4%. It was the largest peacetime expansion of government spending in U.S. history.

After taking office in 2009, with spending and debt already at record high levels and the deficit headed to $1 trillion, President Obama proceeded to pass his own $830 billion stimulus, auto bailouts, mortgage relief plans, theDodd-Frank financial reforms and the $1.7 trillionObamaCareentitlement (which isn't even accounted for in the chart). While spending did come down in 2010, it wasn't the result of spending cuts but rather because TARP loans began to be repaid, and that cash was counted against spending.

In 2011 and 2012, the pace of spending was slowed when a new emboldened breed of Republicans took back the House promising to end the binge. The House Budget Committee, headed by Wisconsin Rep. Paul Ryan, has identified about $150 billion of new spending Mr. Obama wanted in 2011 and 2012 that Republicans would not approve. As the chart shows, government spending as a share of GDP fell, and taxes were not raised. But to attribute this drop in government spending to the president or congressional Democrats would be dishonest.

Slowing spending and the decision not to raise taxes may have prevented the Great Recession from becoming the next Great Depression. In 1930, the Smoot-Hawley tariff was signed into law by another weak Republican president, Herbert Hoover. Smoot-Hawley was the largest single tax increase on traded products in U.S. history. Not surprisingly, the markets collapsed.

Like President Obama, President Hoover proposed massive tax increases. Unlike Mr. Obama, Hoover was successful. The highest marginal income tax rate jumped to 63% from 24% on Jan. 1, 1932. That November, Hoover lost the election to Franklin D. Roosevelt in a landslide.

As if Hoover's tax increases weren't enough, on Jan. 1, 1936, FDR raised the highest marginal income tax rate to 79% with further rate increases up to 83% coming later. Estate and gift taxes, taxes on retained earnings, state and local taxes were also raised. This is why the Great Depression was the Great Depression—massive deficit spending and tax rate increases.

Today's economy is again decelerating in no small part because on Jan. 1, 2013 we face Taxmageddon—the largest automatic tax increase on investment and businesses in generations, including the end of the Bush tax cuts and the more recent payroll tax cut. According to the Congressional Budget Office, this would drain $607 billion out of the economy next year, pushing us back into recession.

Keynesians, of course, are advising more deficit spending and easy money. But the most amazing feature of the nearby chart, which is rarely ever noted, is that when spending declined sharply the economy boomed under President Clinton, and when spending soared under Presidents Bush and Obama, the economy tanked.

Maybe Keynes was wrong and Milton Friedman was right when he warned that government spending is taxation and that government can't tax an economy into prosperity. Friedman made it clear time and again that restraining government spending stimulates the economy by liberating private resources.

The good news is that the tea party Republicans who took office after the 2010 elections have completely altered the face of the opposition. Legislation to repealObamaCareandDodd-Franksoared through the House, as did Rep. Ryan's proposed plan to curb federal spending and lower tax rates for individuals and businesses.

Next, look for an insurrection of closet Clinton New Democrats against their party's big-government leadership, as may have begun last week when Mr. Clinton and other leading Democrats pronounced that all the Bush tax rates should remain in place for another year.

The right point of focus is not at what pace spending has grown under President Obama but instead how much more he needs to cut spending from its bloated levels to bring the economy back to health. The huge increase in spending as a percentage of GDP under Presidents Bush and Obama is the reason we are experiencing the slowest recovery since the Great Depression. As Milton Friedman understood, an economy cannot spend or tax itself into prosperity.

President Obama, after less than five years in office, has already increased the debt limit by more than any other president in U.S. history, including President George W. Bush over eight years in office. Without fiscal constraint, the debt limit would top $18.3 trillion by the end of Obama's term, increasing by another $1.2 trillion from today's level.

To view the interactive version of this chart, please update your browser to its most current version or switch to an alternate browser.

(CNSNews.com) - President Barack Obama has now presided over five of the six largest annual budget deficits the U.S. government has ever run, according to data released yesterday by the U.S. Treasury.

In fiscal 2013, which ended Sept. 30, the deficit was $680.276 billion, according to the Monthly Treasury Statement released Wednesday.

In fiscal 2012, the deficit was $1.089193 trillion; in fiscal 2011, it was $1.296791 trillion; in fiscal 2010, it was $1.294204 trillion; and, in fiscal 2009, it was $1.415724 trillion.

In fiscal 2008, the last full year that George W. Bush was president, the deficit was $454.798 billion.

Even when adjusted for inflation, the $680.276 billion fiscal 2013 deficit is only exceeded by one pre-Obama deficit--the one the U.S. government ran in 1943, during the height of World War II. That year, the deficit was $54,554,000,000--or $738,367,890,000 in inflation-adjusted 2013 dollars.

The 2013 deficit of $680.276 billion exceeded the other annual deficits of the World War II era as well as the annual deficits that the U.S. government ran during World War I, the Vietnam War, or the final years of the Cold War.

In fiscal 1919, which began on July 1, 1918, the U.S. government ran its greatest deficit of the World War I era, according to data published by the Office of Management and Budget. It was $13.363 billion in 1919 dollars, or $180.863 billion in 2013 dollars, according to the Bureau of Labor Statistics inflation calculator.

In 1968, the U.S. ran it greatest annual deficit of the Vietnam era. It was $25.161 billion in 1968 dollars, or $169.294 billion in 2013 dollars.

In 1986, three years before the Berlin Wall came down, the U.S. ran its largest deficit in the final years of the Cold War. It was $221.227 billion in 1986 dollars, or $472.628 billion in 2013 dollars.

Since 1976, the U.S. government’s fiscal year has run from Oct. 1 to Sept. 30. Before that, it ran from July 1 to June 30.

President Barack Obama was elected on Nov. 4, 2008, a little over a month after the beginning of fiscal 2009. He was inaugurated on Jan. 20, 2009, almost four months into fiscal 2009. On Feb. 17, 2009, less than a month into his first term, and less than five full months into fiscal 2009, he signed the American Recovery and Reinvestment Act—an “economic stimulus” law that the Congressional Budget Office has estimated would increase the deficit by $833 billion over ten years.

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